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Pension snub rocks US Airways
Pittsburgh (Tribune Review) - US Airways'' request to slash its pension-funding obligations by $1.1 billion has been rejected by the federal government — a defeat that could cripple the struggling airline''s effort to climb out of bankruptcy, the Pittsburgh Tribune-Review learned.
The rejection came as Pittsburgh''s dominant carrier planned to submit its reorganization plan to a bankruptcy court in Alexandria, Va., late Friday night. Details of that plan were not yet available, however.
The carrier''s reorganization plan was expected to detail a strategy for hubs, routes, aircraft fleet, finances and a new regional-jet division called MidAtlantic Airways, based in Pittsburgh.
Meanwhile, negotiators for US Airways aircraft mechanics, bag handlers and flight attendants last night reached tentative contracts that would save a combined $60 million a year through changes to benefits and work rules.
The International Association of Mechanics said its tentative accord covering some 6,200 mechanics would cut costs by $45 million a year. The union''s pact covering about 4,900 baggage handlers would save some $14 million. Each work group will cast ratification votes in early January.
Any time you can get an agreement from your mechanics, that''s a very good thing, said Darryl Jenkins, director of the Aviation Institute at George Washington University, Washington, D.C. They are the toughest to deal with.
The new concessions come on top of the $160 million in annual wages and benefits already given back this fall by airline mechanics, and the $67 million a year given back by baggage handlers.
Last month, management began seeking an additional $200 million a year from its labor unions. Combined with US Airways pilots'' agreement on Dec. 11 to concede $100 million, the carrier has shaved more than $175 million toward that $200 million goal.
Also last night, the Association of Flight Attendants said it reached a tentative contract agreement with the airline. Neither the union nor the airline disclosed how much would be saved. Management had sought $26 million a year from the attendants union.
The agreements reached last night are in addition to givebacks US Airways labor groups agreed to in the fall that totaled nearly $900 million a year in wages, benefits and work-rule changes.
Despite the new labor agreements, the Pension Benefit Guaranty Corp.''s rejection of US Airways'' request to slash its pension-funding obligations by $1.1 billion is a serious blow, an analyst said.
Cash-strapped US Airways had sought permission to change its defined-benefit, retirement plan so that the airline could set aside only $2 billion from 2003 through 2009, instead of the current $3.1 billion.
But a spokesman for the Pension Benefit Guaranty Corp., which backs and oversees pension funds, told the Pittsburgh Tribune-Review yesterday that the airline''s request was beyond the bounds of what we can do.
US Airways asked us to terminate the plan and to restore it at a lower funding level, said Jeffrey Speicher, a spokesman for the government agency in Washington, D.C. (But) PBGC can''t do what the airline is suggesting.
Earlier this week, U.S. Sen. Arlen Specter, a Republican from Philadelphia, wrote the agency strongly urging it to approve US Airways'' proposal. Otherwise, the employer of about 17,000 Pennsylvanians could be forced into liquidation, Specter warned.
A billion dollars is a lot of money, said analyst Jenkins. I don''t know how this affects their overall reorganization plan, but this cannot be good news.
US Airways had no comment on the pension panel''s decision.
The Arlington, Va.-based carrier has until Jan. 31 to file its reorganization plan with the court. But management has stuck with its Dec. 20 target, in hopes of emerging from bankruptcy by March and receiving $440 million more from its backer in bankruptcy, the Retirement Systems of Alabama.
A bankruptcy judge in Alexandria, Va., will weigh the merits of US Airways'' reorganization plan and hold a hearing on it Jan. 16.
At the same time, the Air Transportation Stabilization Board, created after the Sept. 11, 2001, terrorist attacks to support battered airlines, will use the document to decide whether US Airways would be financially fit to repay a $900 million loan.
Approvals from both the government board and the bankruptcy court are critical to the airline''s chances.
US Airways employs roughly 9,100 in Pittsburgh out of about 33,000 overall. That compares with 11,600 and 45,000, respectively, before Sept. 11.
Yesterday many workers, however, were nervous their jobs could be a casualty of the reorganization.
I''d complete my 20th year with US Airways next June, but I probably won''t make it past January, said Rudy Nance, a ticket agent from Chippewa, Beaver County.
The company has threatened the unions, saying everyone needs to be on board with concessions, or they would shut the airline down by Christmas, said Nance, 56. I''d just as soon let them close it. I''ll go out and find another job. They''re out there.
Pittsburgh (Tribune Review) - US Airways'' request to slash its pension-funding obligations by $1.1 billion has been rejected by the federal government — a defeat that could cripple the struggling airline''s effort to climb out of bankruptcy, the Pittsburgh Tribune-Review learned.
The rejection came as Pittsburgh''s dominant carrier planned to submit its reorganization plan to a bankruptcy court in Alexandria, Va., late Friday night. Details of that plan were not yet available, however.
The carrier''s reorganization plan was expected to detail a strategy for hubs, routes, aircraft fleet, finances and a new regional-jet division called MidAtlantic Airways, based in Pittsburgh.
Meanwhile, negotiators for US Airways aircraft mechanics, bag handlers and flight attendants last night reached tentative contracts that would save a combined $60 million a year through changes to benefits and work rules.
The International Association of Mechanics said its tentative accord covering some 6,200 mechanics would cut costs by $45 million a year. The union''s pact covering about 4,900 baggage handlers would save some $14 million. Each work group will cast ratification votes in early January.
Any time you can get an agreement from your mechanics, that''s a very good thing, said Darryl Jenkins, director of the Aviation Institute at George Washington University, Washington, D.C. They are the toughest to deal with.
The new concessions come on top of the $160 million in annual wages and benefits already given back this fall by airline mechanics, and the $67 million a year given back by baggage handlers.
Last month, management began seeking an additional $200 million a year from its labor unions. Combined with US Airways pilots'' agreement on Dec. 11 to concede $100 million, the carrier has shaved more than $175 million toward that $200 million goal.
Also last night, the Association of Flight Attendants said it reached a tentative contract agreement with the airline. Neither the union nor the airline disclosed how much would be saved. Management had sought $26 million a year from the attendants union.
The agreements reached last night are in addition to givebacks US Airways labor groups agreed to in the fall that totaled nearly $900 million a year in wages, benefits and work-rule changes.
Despite the new labor agreements, the Pension Benefit Guaranty Corp.''s rejection of US Airways'' request to slash its pension-funding obligations by $1.1 billion is a serious blow, an analyst said.
Cash-strapped US Airways had sought permission to change its defined-benefit, retirement plan so that the airline could set aside only $2 billion from 2003 through 2009, instead of the current $3.1 billion.
But a spokesman for the Pension Benefit Guaranty Corp., which backs and oversees pension funds, told the Pittsburgh Tribune-Review yesterday that the airline''s request was beyond the bounds of what we can do.
US Airways asked us to terminate the plan and to restore it at a lower funding level, said Jeffrey Speicher, a spokesman for the government agency in Washington, D.C. (But) PBGC can''t do what the airline is suggesting.
Earlier this week, U.S. Sen. Arlen Specter, a Republican from Philadelphia, wrote the agency strongly urging it to approve US Airways'' proposal. Otherwise, the employer of about 17,000 Pennsylvanians could be forced into liquidation, Specter warned.
A billion dollars is a lot of money, said analyst Jenkins. I don''t know how this affects their overall reorganization plan, but this cannot be good news.
US Airways had no comment on the pension panel''s decision.
The Arlington, Va.-based carrier has until Jan. 31 to file its reorganization plan with the court. But management has stuck with its Dec. 20 target, in hopes of emerging from bankruptcy by March and receiving $440 million more from its backer in bankruptcy, the Retirement Systems of Alabama.
A bankruptcy judge in Alexandria, Va., will weigh the merits of US Airways'' reorganization plan and hold a hearing on it Jan. 16.
At the same time, the Air Transportation Stabilization Board, created after the Sept. 11, 2001, terrorist attacks to support battered airlines, will use the document to decide whether US Airways would be financially fit to repay a $900 million loan.
Approvals from both the government board and the bankruptcy court are critical to the airline''s chances.
US Airways employs roughly 9,100 in Pittsburgh out of about 33,000 overall. That compares with 11,600 and 45,000, respectively, before Sept. 11.
Yesterday many workers, however, were nervous their jobs could be a casualty of the reorganization.
I''d complete my 20th year with US Airways next June, but I probably won''t make it past January, said Rudy Nance, a ticket agent from Chippewa, Beaver County.
The company has threatened the unions, saying everyone needs to be on board with concessions, or they would shut the airline down by Christmas, said Nance, 56. I''d just as soon let them close it. I''ll go out and find another job. They''re out there.
